October 1, 2014

CMS Throws New Wrench into 68-Percent Settlement Offer Decision

By Ronald Hirsch, MD, FACP

On Sept. 30, the Centers for Medicare & Medicaid Services (CMS) held a hospital open-door forum in which the first item on the agenda was the 68-percent settlement offer on pending appeals.

After a review of the basics of the offer, CMS representatives entertained questions. One provider inquired about a common scenario: an admission having been denied by an auditor, the hospital appealed the determination yet subsequently withdrew the appeal, choosing to rebill as Inpatient Part B, but had not yet been paid the inpatient Part B sum. The provider representative then asked if these claims are included in the settlement offer. Melanie Combs-Dyer, the CMS representative on hand, responded that all claims that are pending and have not yet been paid are eligible for inclusion in the 68-percent settlement offer. She also suggested that the caller refer to the frequently asked questions that CMS has posted, noting that several others have asked similar questions and that the responses will be posted later this week. She further suggested listening to the Oct. 8 CMS call on the settlement.

As a follow-up remark to that question, I explained that hospitals may be paid more for some rebilled claims than they would be paid for those same claims with the settlement offer – and I asked if a hospital is required to include all withdrawn appeals that are eligible for Inpatient Part B rebilling on their eligible claim spreadsheet. Ms. Combs-Dyer stated that if a hospital agrees to participate, all claims that have not yet been paid under Part B must be included in the settlement. What are the implications of this answer? If Ms. Combs-Dyer answered correctly, and I would caution readers to wait for written verification from CMS, it means that every claim denial based on patient status that is still in the process of appeal or has been withdrawn and is being processed for Part B rebilling payment (even if it has not actually been paid by a Medicare Administrative Contractor) must be included.

Most hospitals assumed that if they had already withdrawn an appeal and either rebilled the claim or were waiting for acknowledgement of the withdrawal, they would not be required to include those claims on their list of claims eligible for settlement – and they had an expectation of receiving the rebilled payment in full. This response from Ms. Combs-Dyer means that hospitals must now go back to their records, find these claims, and include them in their calculations of the potential 68-percent settlement payment, completely changing the cost-benefit equation.

It has also been discussed within the provider community that the 68-percent settlement offer was never really 68 percent of the DRG payment. The overall sum is highly dependent on the status of the patient deductible payment, and for many inpatient admission denials of procedures – such as those associated with pacemakers, cardiac catheterizations, defibrillators, laminectomies, and so on – the rebilled Inpatient Part B payment exceeds the 68-percent settlement offer (whereas for medical admissions, such as for TIA, syncope or chest pain, the 68-percent settlement payment will in almost all circumstances exceed the rebilled Part B payment).

Because of that payment difference, many hospitals had hoped to be able to submit withdrawals of these “better-paying,” procedure-related admission appeals prior to accepting the 68-percent offer and to submit their settlement list to CMS (including only the remaining claims) for the 68-percent settlement. This would have allowed the hospital to get their higher Part B rebill payment on procedure-related claims and the higher 68-percent settlement payment on the medical claims. But alas, that option appears to have been taken off the table.

CMS reaffirmed on the call that the Oct. 31 deadline is firm, although we have seen CMS back off strict deadlines in the past. All participants were encouraged to refer to the FAQs and listen to the upcoming call. It now appears that forthcoming information on the handling of rebilled claims is more important than ever.

About the Author

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at Accretive Physician Advisory Services at Accretive Health. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the American Case Management Association and a Fellow of the American College of Physicians.

Contact the Author

RHirsch@accretivehealth.com

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